How Missouri Taxes Retirement Income (and Why Illinois Is Different)

Revised August 14, 2026

Imagine it’s a Tuesday in February and two neighbors are standing at the end of a Kirkwood driveway comparing notes. Both retired inside the last two years. Both spent most of their careers in the same downtown building. Both are pulling roughly the same money out of roughly the same kinds of accounts. One of them just wrote a check to the state. The other one owed nothing at all on the same withdrawal.

The difference isn’t a clever accountant. It’s a bridge. One of them still lives in St. Louis County. The other sold and bought something smaller in Belleville a couple of years back — flat yard, one level, closer to a daughter — and in doing that quietly moved from one state’s retirement rules into a completely different set.

Maybe you already know the feeling of not being sure which set of rules is yours. People here move short distances constantly. O’Fallon, Missouri to O’Fallon, Illinois. Affton to Columbia. St. Charles to Edwardsville. Florissant to Granite City. Almost nobody treats a fifteen-minute move as a tax event, and for retirement income it is one of the largest ones most households will ever make.

This is a plain-English walk through how retirement income is taxed on both sides of the river, with the tax year attached to every number, because Missouri’s rules for retirees changed recently and some of the caps reset annually. It is general educational information, not tax advice. Nothing here is a recommendation about your return. Before you act on any of it, a CPA or an enrolled agent should look at your actual numbers — the interaction between these rules is where people lose money, and that interaction only shows up on a real return.

The short answer: the river decides it

Illinois subtracts nearly all federally taxed retirement income out of its state income tax. Missouri exempts Social Security completely for people 62 and older, exempts public pensions up to an annual cap, and then treats private pensions, 401(k)s and IRAs far less generously — a $6,000 exemption per person that phases out at income levels a lot of retirees clear without trying. Two households with identical accounts and identical withdrawals can land in very different places purely on the strength of a mailing address.

That is the headline, and it is genuinely the most useful thing to know in a metro that straddles a state line. But it is not the whole bill. State income tax is one line in a much longer stack that includes property tax, sales tax, vehicle taxes, utility costs, and what a comparable house costs in the first place. A retirement-income exemption is not the same thing as a lower cost of living, and anyone deciding where to live on the strength of one line of a tax return is looking at a slice of the picture.

Every figure below carries the tax year it applies to. Where the 2026 number has not been published yet, this says so plainly rather than guessing at it.

Does Missouri tax social security and pensions?

Missouri does not tax Social Security for most retirees, and it partly exempts pensions depending on where the pension came from. Those are two separate rules with two separate sets of paperwork, and the second one is where the confusion lives.

On Social Security, the Missouri Department of Revenue states that for tax years beginning January 1, 2024 and forward, Missouri does not tax 100 percent of Social Security benefits for individuals age 62 or older, and 100 percent of Social Security disability benefits, as long as those benefits are included in federal adjusted gross income. The income limits that used to phase this out — $85,000 for single filers and $100,000 married filing combined — applied to tax year 2023 and prior. They are gone. That change came out of Senate Bill 190 from the 2023 session, and it is still the law as of the 2025 return, which is the most recent one the Department has published forms for.

Two details matter. The Social Security deduction requires you to be 62 by December 31 and to check the 62-and-older box on page one of Form MO-1040. The disability version carries no age limit. Both are claimed in Part 3, Section C of Form MO-A, the adjustments form that attaches to your MO-1040. If you skip MO-A, you do not get the exemption. The state does not apply it for you.

So how much of Social Security is taxable in Missouri? For a 62-year-old or older whose benefits are included in federal AGI, the Missouri answer is none of it, at any income level, for tax year 2024 and after. The federal answer is a different story, and it is the one that catches people. Missouri exempting your benefits does not stop the IRS from taxing them.

Federally, the IRS works from what it calls combined income — half your Social Security benefits plus your other income, including pensions, wages, interest, dividends and capital gains. Single, head of household or qualifying surviving spouse filers between $25,000 and $34,000 of combined income may owe federal tax on part of their benefits, and above $34,000 up to 85 percent of benefits can be taxable. Married filing jointly, those thresholds are $32,000 and $44,000. Those numbers are not indexed for inflation and have not moved in decades, which is why more retirees drift into them every year.

Are public pensions taxable in Missouri?

Public pensions are partly exempt in Missouri, up to a ceiling that changes every year — and the ceiling gets reduced by whatever Social Security deduction you claim. That second half is the part almost nobody sees coming.

Missouri’s public pension exemption covers pensions received from any federal, state or local government source. Think retired teachers, police officers, firefighters, city and county employees, state workers, federal civil service. The Department of Revenue describes the maximum as the maximum Social Security benefit amount for that tax year, which means it is a moving target rather than a fixed statute number.

On the 2025 Form MO-A, Part 3, Section A, that printed maximum is $47,633 per spouse. The calculation is the lesser of your taxable public pension or that figure. For tax year 2026 — the return you will file in early 2027 — the cap will be set at the 2026 maximum Social Security benefit, and as of this writing the Department has not published the 2026 MO-A. Do not assume $47,633 carries forward. Check the 2026 form when it posts, or ask your preparer for the current figure.

Now the mechanic that surprises people. On that same Section A, Line 3 asks you to bring over the Social Security amount you deducted in Section C, and Line 4 subtracts it from your capped public pension figure. If the Social Security deduction is larger than the capped pension amount, the public pension line goes to zero. The two exemptions do not stack on top of each other — the Social Security deduction eats into the public pension ceiling dollar for dollar.

In practical terms, a retired public employee with a healthy pension and a healthy Social Security benefit does not get to shelter the full value of both. Missouri gives you one ceiling roughly the size of a maximum Social Security benefit, and the Social Security deduction is claimed first against it. That is a real number for a lot of St. Louis-area households, and it is the single most common place where a do-it-yourself Missouri return goes wrong in either direction.

There is a timing wrinkle worth flagging for retired Missouri educators and public safety workers specifically. The Social Security Administration confirms that the Social Security Fairness Act, signed January 5, 2025, repealed the Windfall Elimination Provision and the Government Pension Offset, with December 2023 the last month those rules applied. Public employees who previously had their Social Security reduced or wiped out by WEP or GPO may now be collecting benefits they never used to receive. If that describes you, your Missouri return has a new moving part: a Social Security deduction that did not exist before, which now reduces the public pension exemption you have been claiming for years. That is exactly the kind of change worth having a preparer look at rather than assuming last year’s return still works.

One more line to know about. Military retirement benefits get their own subtraction on Form MO-A, Part 1, Line 10 — a different line, with different rules, from the public pension exemption in Part 3. If you have military retirement pay, do not let a preparer fold it into the public pension calculation without checking the MO-1040 instructions for that line.

Totally unrelated — but Ste. Genevieve eats better than you’d expect.

The private pension exemption: $6,000, and why plenty of people get none of it

Missouri’s private pension exemption is capped at $6,000 per person and it phases out fast. This is the rule that governs 401(k) money, IRA money, and pensions from private employers — in other words, most of the retirement savings in the metro.

The 2025 Form MO-A labels Part 3, Section B in so many words: private pension calculation for annuities, pensions, IRAs and 401(k) plans funded by a private source. The steps are short and unforgiving:

• Start with your Missouri adjusted gross income from Form MO-1040, Line 6
• Subtract your taxable Social Security benefits from federal Form 1040, Line 6b
• Compare what is left against the threshold for your filing status — $25,000 single, head of household or qualifying surviving spouse; $32,000 married filing combined; $16,000 married filing separate
• Anything above that threshold reduces the exemption dollar for dollar
• The exemption itself is capped at $6,000 per spouse before that reduction

Run that math and the shape becomes obvious. A married couple filing combined with $38,000 of income above their Social Security has already burned through the entire $12,000 the two of them could have claimed. A single filer with $31,000 of non-Social-Security income has nothing left. The exemption is real, and it is aimed squarely at lower-income retirees. Households with meaningful 401(k) withdrawals generally will not see a dollar of it.

Those thresholds and the $6,000 cap are printed on the 2025 MO-A and have been stable in Missouri statute for a long time, but they are worth confirming against the 2026 form rather than assumed. Missouri has been moving on retiree taxation recently, and a figure that held for fifteen years is not a guarantee.

How Missouri treats 401(k) and IRA withdrawals

Missouri treats a traditional 401(k) or IRA withdrawal as ordinary income, taxed at regular state rates, with only the small private pension exemption available to offset it. There is no special retirement rate and no blanket exclusion the way Illinois has one.

The mechanism is simple. Missouri starts from your federal adjusted gross income. A pre-tax 401(k) or traditional IRA distribution is already inside that number, because the IRS taxes it as ordinary income. Missouri then applies its modifications on MO-A. Since the private pension exemption tops out at $6,000 per person and phases out at $25,000 or $32,000 of income, most of a substantial withdrawal simply flows through to the Missouri return and gets taxed.

On rate: the Department of Revenue’s individual income tax year changes page shows a top rate of 4.7 percent applying to Missouri taxable income over $9,191 for tax year 2025, with brackets indexed for inflation. Missouri’s brackets compress quickly, which means an ordinary retiree is at or near the top marginal rate long before anyone would call them wealthy. Confirm the 2026 bracket table with the Department when the 2026 forms post rather than working off last year’s chart.

A few related pieces that come up constantly:

• Roth distributions. A qualified Roth withdrawal is not taxable federally, so it is not inside federal AGI, so it is not inside Missouri AGI. There is nothing for Missouri to tax and nothing to claim on MO-A.
• Required minimum distributions. An RMD is not a separate category. It is an ordinary distribution that you are required to take, and it is taxed exactly like any other pre-tax withdrawal — which also means it can push you over the private pension exemption threshold and over the federal combined-income line for Social Security in the same year.
• Capital gains. Missouri enacted a subtraction allowing eligible individuals to subtract 100 percent of federally reported capital gains from federal AGI, and the Department’s capital gains subtraction FAQ describes it as effective for the 2025 tax year. The 2025 Form MO-A carries a capital gain subtraction on Part 1, Line 18. This matters to retirees selling appreciated stock, a rental property, or a long-held second home — but it does not touch ordinary 401(k) or IRA withdrawals, which are not capital gains. The FAQ page also carries language about tax years beginning on or after January 1, 2026 in the context of the corporate version of the subtraction, so confirm your specific year with a preparer before you plan a sale around it.
• Withholding. Plan administrators default to federal withholding and often to no state withholding at all. A retiree who moved from a salary with automatic withholding to distributions with none is the classic April surprise.

Illinois: what it actually does and does not cover

Illinois does not tax the federally taxed portion of nearly every common form of retirement income, which is why the Metro East keeps showing up on retirement lists. The exemption is broad, but it is a list, not a blanket, and knowing where the list ends is the useful part.

The Illinois Department of Revenue’s official answer and Publication 120, Retirement Income — the current revision is dated December 2025 — say you may subtract on Form IL-1040, Line 5 the federally taxed portion, not the gross amount, of income received from:

• A qualified employee benefit plan, including 401(k) plans
• An Individual Retirement Account, including amounts rolled over to a Roth IRA, or a self-employed SEP plan
• Social Security benefits
• Railroad retirement income
• A government retirement or government disability plan, including military plans
• A state or local governmental deferred compensation plan paid under Internal Revenue Code Section 457
• Capital gains on employer securities received in a lump-sum distribution, to the extent of net unrealized appreciation at distribution
• Group term life insurance premiums paid by a qualified retirement or government retirement plan and included as wages
• Interest realized on the redemption of U.S. retirement bonds

Publication 120 also states that early distributions from qualified plans and IRAs may be included in the subtraction. And it is just as specific about what you may not subtract: income that is not from a qualified employee benefit plan, which it says includes third-party sick pay and income from deferred compensation and disability plans that are not government plans; and ordinary income from a qualified plan where you elected the special 10-year averaging method on federal Form 4972.

Read that exclusion list twice if you had a non-government executive deferred compensation arrangement, a supplemental executive retirement plan, or a private disability policy. Those are the arrangements that people assume are covered and frequently are not.

Illinois charges a flat individual income tax rate of 4.95 percent — the rate printed in the state’s 2026 withholding tax tables — with a personal exemption allowance the Department’s FY 2026-15 bulletin puts at $2,850 for 2025 and $2,925 for 2026. That flat rate still applies to everything the subtraction does not reach: wages from a part-time job, interest, dividends, taxable capital gains outside the employer-securities rule, rental income, self-employment or consulting income. A retiree in Glen Carbon who does contract work two days a week pays Illinois income tax on that work like anyone else.

One filing change to note if you are comparing this year’s return against last year’s: the same bulletin says certain retirement payments to retired partners reported on Schedule K-1-P, and beneficiary shares of retirement payments reported on Schedule K-1-T, no longer belong on IL-1040 Line 5 and should be reported on Schedule M, Line 14, for tax years 2025 forward.

What income is not taxable in Missouri?

Since people ask it in exactly those words: for a Missouri retiree, the categories that come off the return are Social Security benefits and Social Security disability benefits at 62 and older, public pension income up to the annual cap and net of the Social Security deduction, private pension, IRA and 401(k) income up to $6,000 per person subject to the income phase-out, military retirement benefits on their own MO-A line, qualified Roth distributions because they never enter federal AGI at all, and interest from exempt federal obligations. Missouri also has that capital gains subtraction. Everything else — wages, self-employment income, rents, taxable interest and dividends, and the bulk of most people’s 401(k) withdrawals — is ordinary Missouri income.

That is a meaningfully shorter list than the Illinois one. It is also the reason two people with the same statement balances can land so far apart at filing time.

The five-mile move: what actually changes when you cross the river

Retirement income is taxed by the state you live in, not the state where you earned it. That is not a matter of state courtesy — it is federal law, and it is the fact that makes a short move across the metro so consequential.

Title 4, Section 114 of the U.S. Code bars a state from imposing an income tax on the retirement income of an individual who is not a resident or domiciliary of that state. It was enacted in 1996 after several states tried to keep taxing pensions that former residents were collecting elsewhere. The definition of retirement income in that section is broad: qualified trusts under Section 401(a), simplified employee pensions, annuity plans and contracts, individual retirement plans, eligible deferred compensation plans, and governmental plans, among others. Non-qualified deferred compensation counts only when it is paid in substantially equal periodic payments over life expectancy or a period of at least ten years.

So a career spent working in downtown St. Louis does not give Missouri a claim on your 401(k) once you are domiciled in Waterloo or Highland. And the reverse holds too. What follows from that is a short list of things worth getting right:

• Residency is a facts test, not a mailing address. Where you actually live, where you are registered to vote, where your driver’s license is issued, where your vehicles are registered, where your homestead is, how many days you spend where. A part-year move creates part-year returns in both states for that year, with income allocated between them.
• Earned income is different from retirement income. Section 114 protects retirement income. Wages are sourced to where the work is physically performed. A Belleville retiree who takes a part-time job in Clayton owes Missouri nonresident income tax on those Missouri wages.
• There is no Missouri–Illinois reciprocity. Illinois lists its reciprocal agreements as Iowa, Kentucky, Michigan and Wisconsin. Missouri is not on that list, which means cross-border workers file in both states and use a credit for taxes paid to the other state to avoid double taxation. That is a mechanical fix, not an automatic one — somebody has to actually claim the credit.
• Withholding follows the old address until you change it. Pension administrators and IRA custodians will keep withholding for the state on file. Update it the same week you move, not the following April.

Does the St. Louis City 1 percent earnings tax touch retirement income?

No — the city earnings tax is a tax on earned income, and retirement distributions are not earnings. The City of St. Louis describes it as a one percent tax on earned income such as salaries, wages, commissions, tips and other compensation, and the Collector of Revenue’s earnings tax page states directly that retired and unemployed individuals do not pay the tax.

The part that does apply to retirees is the part about working. The city’s individual earnings tax information says the one percent is collected from residents of the City of St. Louis regardless of the location of their employer, and from employees of businesses located or performing work or services within the City of St. Louis regardless of where they live. So:

• A retiree living in the city with no earned income has nothing to file on the earnings tax.
• A retiree living in the city who takes a part-time job anywhere owes the one percent on those wages.
• A retiree living in Ballwin, Belleville or anywhere else who works part-time inside the city limits owes the one percent on the wages earned there.

Kansas City runs a similar one percent earnings tax, which is why the state return has a line for it: Form MO-A, Part 2, Line 10 backs earnings taxes out of the state and local income tax figure that otherwise gets subtracted from your Missouri itemized deductions. If you itemize and you paid an earnings tax, that line is not one to leave blank.

If you are weighing a city address against a county one, the earnings tax is a factor for a working household and largely a non-factor for a fully retired one. It is one of the rare cases where retirement genuinely simplifies something.

Two things people confuse with retirement income tax

Both of these come up in the same conversation and neither is an income tax. They are worth separating out because they are where a lot of Missouri retirees actually find money.

The senior property tax freeze. The same 2023 legislation that removed the income limits on the Social Security exemption also authorized Missouri counties to freeze real property taxes for eligible seniors on their primary residence. It is a county-by-county program, adopted locally, with local applications and local deadlines — not something the state applies automatically. St. Louis County and the City of St. Louis both run one, and St. Charles, Jefferson and Franklin residents should check with their own county assessor or collector rather than assuming. Deadlines and renewal requirements vary by county and change, so get them from the county itself rather than from a summary article.

The Missouri Property Tax Credit. Often called the circuit breaker, this is a state credit for certain senior citizens and 100 percent disabled individuals covering a portion of the real estate taxes or rent they paid. The Department of Revenue puts the maximum at $750 for renters and $1,100 for owners who owned and occupied their home. Household income limits apply and they are tight; the Department publishes a qualification chart, and that chart rather than a number quoted secondhand is the thing to check. Renters in a facility that pays no property taxes are not eligible.

If your income is low enough for the circuit breaker, it is probably low enough that free filing help is available too. Our guide to free tax preparation in St. Louis covers the VITA and AARP Tax-Aide programs, both of which handle Missouri returns for seniors at no cost.

Who gets the $6,000 tax break for the elderly?

There are two different $6,000 breaks floating around right now and they get mixed up constantly, so here is the separation.

The first is the federal enhanced deduction for seniors created by the 2025 tax law. The IRS describes it as a $6,000 deduction for individuals age 65 and older, or $12,000 for a married couple if both spouses qualify, effective 2025 through 2028, phasing out for taxpayers with modified adjusted gross income over $75,000, or $150,000 for joint filers. It is in addition to the existing additional standard deduction seniors already get. It is a deduction, which means it reduces taxable income — it does not make Social Security tax-free, despite how it has been described in a lot of places.

The second is the Missouri private pension exemption covered further up: $6,000 per person against private pension, IRA and 401(k) income, phasing out above $25,000 single or $32,000 married filing combined. Same dollar figure, entirely different rule, different government, different form.

A 66-year-old in Ferguson with a modest 401(k) could plausibly qualify for both in the same year. A 66-year-old in Chesterfield with a larger one may qualify for neither. That is the whole answer, and it is why a general figure from an article is not a substitute for someone running your actual return.

What to take to a CPA or an enrolled agent

You do not need to arrive as an expert. You do need to arrive with the documents that let someone else be one. Bring:

• Last year’s complete federal and state returns, including MO-A or Schedule M, not just the summary pages
• Your SSA-1099 and every 1099-R, including the small ones you forgot about
• A list of every account you draw from, whether it is pre-tax or Roth, and what you took out last year
• Your exact residency dates if you moved during the year, and the closing documents if a house was involved
• Any W-2 from part-time work, and where the work was physically performed
• Your property tax receipt and, if you rent, the rent paid statement

Then ask these, and ask them in this order:

• Which state am I a resident of for this tax year, and how are you determining that
• Am I claiming the Social Security deduction, and is it reducing my public pension exemption
• What is the public pension cap for this specific tax year, and where did that number come from
• Do I qualify for any of the private pension exemption, or does my income phase it out entirely
• Do I qualify for the federal enhanced senior deduction, and where does my modified AGI sit against the phase-out
• How much of my Social Security is taxable federally, and what would push more of it into the taxable range
• Is my state withholding on distributions set to the state I actually live in
• Am I eligible for the property tax credit or a county senior freeze, and who files those
• If I moved this year, are we filing part-year returns in both states, and is the credit for taxes paid to the other state being claimed

Ask the same questions of every preparer you interview so the answers line up against each other. That is the same discipline that makes choosing a financial advisor a comparison rather than a leap of faith. And if you happen to run a tax practice in the metro yourself, being listed is how neighbors find you in the two weeks a year they go looking.

To say it once more plainly, because it matters here more than in most articles: this is general information about how these rules are written, not tax advice about your return. State tax law changes, the caps reset annually, and the interaction between a Social Security deduction, a pension exemption and a residency change is exactly the kind of thing that needs a licensed professional looking at your actual documents. A CPA or an enrolled agent should review your specifics before you rely on any of it.

Sorting out the rest of the paperwork too? Our guide to what a will or trust costs in Missouri covers the probate math.

Frequently asked questions

Does Missouri tax social security and pensions?

Missouri does not tax Social Security for people 62 and older. Per the Missouri Department of Revenue, for tax years beginning January 1, 2024 and forward, 100 percent of Social Security benefits for individuals 62 or older and 100 percent of Social Security disability benefits are exempt, with no income limit. Pensions are treated differently by source. Public pensions from federal, state or local government are exempt up to the maximum Social Security benefit amount for that year, reduced by any Social Security deduction claimed. Private pensions, IRAs and 401(k)s get only $6,000 per person, phased out above $25,000 single or $32,000 married filing combined.

How much of Social Security is taxable in Missouri?

For tax year 2024 forward, none of it is taxable to Missouri if you are 62 or older by December 31, or if you are receiving Social Security disability benefits at any age. The old income limits of $85,000 single and $100,000 married filing combined applied to tax year 2023 and earlier and no longer apply. You still have to claim it on Form MO-A, Part 3, Section C and check the 62-and-older box on Form MO-1040 — the exemption is not automatic. Federal tax on Social Security is separate and still applies based on IRS combined income thresholds.

Are public pensions taxable in Missouri?

Partly. Missouri exempts pensions from federal, state and local government sources up to the maximum Social Security benefit amount for that tax year. On the 2025 Form MO-A that printed maximum is $47,633 per spouse, and the exemption is the lesser of your taxable public pension or that figure. The 2026 cap will be set at the 2026 maximum Social Security benefit and had not been published as of this writing. Critically, the exemption is then reduced dollar for dollar by any Social Security deduction you claim — the two do not stack.

What income is not taxable in Missouri?

For retirees, the main exclusions are Social Security and Social Security disability benefits at 62 and older, public pension income up to the annual cap net of the Social Security deduction, private pension, IRA and 401(k) income up to $6,000 per person subject to income phase-outs, military retirement benefits on their own MO-A line, and qualified Roth distributions, which never enter federal adjusted gross income at all. Missouri also allows a subtraction for interest from exempt federal obligations and a capital gains subtraction. Wages, self-employment income, rents, taxable interest and dividends, and most 401(k) withdrawals remain ordinary Missouri income.

Who gets the $6,000 tax break for the elderly?

There are two, and they are unrelated. The federal enhanced senior deduction is $6,000 per individual age 65 and older, $12,000 for a qualifying married couple, effective 2025 through 2028, phasing out above $75,000 modified adjusted gross income or $150,000 for joint filers, per the IRS. Separately, Missouri’s private pension exemption is $6,000 per person against private pension, IRA and 401(k) income, phasing out above $25,000 single or $32,000 married filing combined. Some people qualify for both, some for neither, and the federal one is a deduction rather than an exemption of Social Security.

What is the new tax law for seniors in Missouri?

The change most people mean is Senate Bill 190 from the 2023 session, which removed the income limits on Missouri’s Social Security exemption starting with the 2024 tax year. Before that, the full exemption phased out above $85,000 single or $100,000 married filing combined. Now it applies at any income for those 62 and older. The same legislation authorized counties to adopt a senior real property tax freeze, which St. Louis County and the City of St. Louis both offer through local application. Missouri has also added a subtraction for federally reported capital gains for eligible individuals.

The two neighbors in that Kirkwood driveway are not being taxed on how carefully they saved. They are being taxed on which state they woke up in, which exemptions they remembered to claim on which attachment, and whether anybody told them that two Missouri exemptions cancel each other out instead of stacking. Two of those three are fixable this year — and the third is a reason to have somebody read the return before you sign it.

About the Author: The St Louis Near Me Directory Team
Written by a dedicated team of St. Louis locals who live, work, and play right here in the St. Louis metro. Founder Lane Forman and team are committed to building the region’s most trusted directory by verifying listings and connecting local businesses with loyal customers across Missouri and Illinois.

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